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SGST/CGST and IGST paid on Inputs and Capital goods is available under GST regime unlike in the present law where the credit of VAT/CST paid on Inputs was costs to the service provider and that have increased the cost of few services. Further, the credit of SAD paid on imports will also be available to service provider as it is likely to be subsumed into GST regime.
Composition levy: A new concept of composition levy has been introduced for service provider providing services up to the value of Rs.50 lakhs. Under which the Service Provider has to pay tax at the lower rate which shall not be less than one percent whereas the credit of input tax is not available. Therefore the small service provider may adopt this scheme as the tax rate will be very low.
Inputs held in stock: The Service provider will be entitled to get the CENVAT credit of Inputs held in stock in case where he is shifting from exempted category to taxable category. Further this credit can be utilized for the payment of output liability of tax in future.
Repairs & Maintenance of Plant and Machinery: The service provider providing repairs & maintenance of plant & machinery will be eligible to get the credit of both Input on goods(i.e. Excise, Vat) and Input services in GST regime unlike in the present law were only credit of Input service will be available.
No double taxation: In the present law Service provider providing works contract service have to pay both Service Tax under Finance Act, 1994 and VAT under State VAT Act on the same income at concessional rate which would be around 70% each. Thereby resulting in tax payable on the amount of 140% of service value resulting in double taxation on the income value to that of 40%. However, in the GST regime this double taxation on the same income will be taken care off as the works contract is deemed to be the supply of service.
Software Industry: At present the software industry is paying both Service Tax and VAT on Sale of software thereby increasing the cost of Software. Further, the same income is subjected two taxes. However, in the GST the same issue is expected to be resolved, thereby reducing the cost of software to consumers.
Service Cost: with the introduction of GST the cost of inputs is expected to decline with the abolition of multiple taxes on inputs like Excise Duty, VAT, CST etc., and introduction of one tax, GST. Further, due to subsuming of entry tax and octroi the transportation cost for inputs will also be reduced and ultimately reducing the cost of inputs.
SSP exemption: The Service Provider under GST would be able to get the basic exemption up to the turnover of Rs.20 Lakhs when compared to Rs.10 Lakhs under Service Tax laws. However, the Service Provider in north eastern states will continue to get the similar benefit as in the present regime as the SSP limit for north eastern states is fixed at Rs.10 Lakhs only.